Federal Reserve Board Chairman Alan Greenspan has endorsed a bill that would let banks pay interest on corporate checking accounts and receive interest on holdings kept at the reserve banks.

"The Federal Reserve strongly supports this legislation," Mr. Greenspan wrote in a Sept. 26 letter to Rep. Jack Metcalf. "It would eliminate a significant distortion in the financial markets that places small businesses at a particular disadvantage. Moreover, it would assist us in our implementation of monetary policy."

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